Economies Have Currencies = Social Media Principle #6
This post is the sixth in a series of my interpretation of Social Media Principles. More to come in the near distant future.
Previously, I discussed rules in social media, framing the discussion in terms of etiquette and social norms. Once predictability of outcome for actions exist, bargaining and trade is possible, thus…
Currency, from Department of Chemistry, Washington University
Economies have currencies:
Trade is possible with Karmic infrastructure and rules of engagement.
Karmic infrastructure and rules of engagement provide people with boundaries within which to operate. Those who do not follow the norms are marginalized or on the edge/outside of the system.
One of the main ways we interact with others is through exchange of value, which can take many forms. For example, this can look like the exchange of approval, affection or information. Jim Benson has blogged about the currencies of Social Media, discussing artifacts and recognition.
My Company Cares Because…?
By making the artifacts and recognition distinct, measurable, and concrete strategic decisions about knowing with whom to trade becomes possible.
For brands, this means knowing who is interested in 1) your industry; 2) your business; and 3) why they care.
For consumers, this means knowing 1) if you have any brand affinities; 2) why you think about brands, products and services the way you do; and 3) providing actionable feedback to the appropriate people.
For example, I have spent quite a bit of time discussing whrrl, a social networking/location aware/social experience discovery application. Whrrl’s community manager and I have spent quite a bit of time discussing Web 2.0, social media and restaurants. As a top whrrler, I trade her my insights, links and content to help create a better experience for me. I’ve touched 262 places, rated/reviewed 85 places and bookmarked 42 places/events as “want to go.”
On her end, she informs me of whrrl-related events, new feature releases and other relevant information based on our relationship created with the exchange of value. She actively solicits my feedback and integrates those insights as appropriate.
Predictability and ability to set and adjust expectations around actions enable trade between members of the community. Social media participation reflects this, via the exchange of ideas and information through comments, reviews, blog posts and linking.
January 5th, 2009 at 7:13 pm
I like how this dovetails with both karma and context. The definition of value between you and Whrrl has become personalized. Your benefit for using the product is entirely based on the energy you’ve put into it. The way your benefit is obtained is largely a function of context for both you and Whrrl - what do you need now? what do they need? how can an exchange be made?
The social aspect of social media sets a stage where that negotiation can take place.
January 5th, 2009 at 7:15 pm
[...] 6 [...]
January 5th, 2009 at 7:23 pm
I think every company should care about Social Media and make it an effective marketing resource to use in their agenda or business plan. I like your example of the Whrrl application you did and this is my first time visting your blog and commenting. Very nice post and I will be stopping by later in the future.
January 5th, 2009 at 7:29 pm
Interesting. I haven’t put a large investment into Whrrl, but I have invested value (in terms of time and metadata) in over 1000 Netflix ratings, which in turn disincentivizes me from using any other service, because Netflix is now well-trained for me, and while it’s a sunk cost I wouldn’t want to redo that effort on another service if I can avoid it.
January 5th, 2009 at 7:40 pm
I’m not sure that I agree you are talking about currencies. You are creating value within your one-to-one social space (one company to one person ), but that is not a currency you can re-use somewhere else.
By having 1000 netflix ratings, you have not intrinsic advantage as an Amazon shopper for example. Nor can you trade the effort that you put into Netflix for Amazon ratings. The same is true for Whrrl or any other rating or social engagement platform that a company uses to embrace it’s constituents.
You do gain credibility with the single company you have invested your time in, but again, I would argue that is not a currency. That is simply trade - just like bartering, etc.
January 6th, 2009 at 5:55 pm
Josh, you raise great points. Gaining credibility with a single company in a public way (in terms of reviews written, blog posts commented on, link love, so forth) creates currency in the form of social and intellectual capital. By creating visibility regarding who you are, what you think and expanding who you know of (and who knows of you), you can create value for others via information exchange at a later date.
January 7th, 2009 at 9:41 pm
[...] previous post, Economies Have Currencies, led to discussion on Twitter and on my blog. Social media principle #7 perhaps explains this [...]
January 7th, 2009 at 11:16 pm
I would agree that something like my Netflix ratings are not trivially portable, so comparing them to a single currency isn’t accurate. With certain openness assumptions, we could model this as something like a wider multi-currency economy.
For example, I have US dollars. I need CFAs to travel in Mali. Not enough Americans travel to French West Africa for any moneychanger here to stock CFAs; similarly, a Malian wouldn’t accept dollars. However, it’s trivial to convert your dollars to Euros before leaving the US, and the sketchy moneychanger at the airport in Bamako will happily give you a wad of CFAs for your crisp Euros.
Mapping this back to movie ratings, the Netflix API does allow me to read all of my ratings. It’s easy to imagine an API that would allow you to set ratings on Amazon; there would be some non-trivial work matching up items, but they’re both 5-star systems and the item name strings probably have low edit distance. What’s missing at the moment is a mashup that would take the role of the euro in being a currency that connects the two separate real-world currencies.
If someone builds the value converter, does that transform that effort/data from something to barter to something more like a proper currency?
January 8th, 2009 at 5:25 pm
The interesting thing about the notion of “currency” here is the element of portability or perhaps convertibility.
We had some lengthy discussions about this in the office the other day.
The value converter for a regulated commodity or currency is fairly clear. The value converter for social capital is more contextual and negotiated.
In county records, it is not at all uncommon to find houses bought in the 1800s for some money, some chickens, and a mule. Was there a cash equivalent for “chicken”? Perhaps, but not a hard one. Some chickens have a long term derivative value in that they can become more chickens, lay eggs, and / or be eaten.
Nonetheless, they were a negotiated currency in that particular transaction.
With social capital, we can parlay that into future opportunities. The means of exchange and the value of that exchange will be very contextual, however.